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Steel & Aluminum Tariffs Versus Beer

Aluminum Spools - courtesy of Wall Street Journal
courtesy of the Wall Street Journal

Around 5 years ago, I effectively stopped writing about politics for a number of reasons. Overall, it felt like it was eating my soul – the negative attitudes, the vitriol, the bullshit theatrics, etc. Though I really stopped because I wanted to focus my writing on things less divisive and spend my time invested in more positive pursuits, like craft beer.

While growth in the craft beer space has slowed (chiefly for the largest brewers), we’re still situated on a historically high plateau, like none the brewing industry has ever seen. Then, just like that, the current administration has decided to impose tariffs on steel and aluminum imports, both materials the entire beer industry relies heavily upon.

Nearly 3 months ago, the President, in his infinite wisdom, decided to emplace tariffs of 10% on aluminum and 25% on steel imports. The rationale behind this bold move? A Commerce Department investigation into steel and aluminum imports being a threat to national security. Seriously.

In the beginning of April, the administration reversed course, at least in regard to Mexico, Canada, and the EU, creating an exemption while NAFTA negotiations continued. Unfortunately, those talks over NAFTA, according to Commerce Secretary Wilbur Ross, took longer than “we had hoped” and trade talks with the EU bore no fruit as well.

As a result, those 25% tariffs on Steel and 10% tariffs on aluminum go into effect Friday at midnight.

The temptation to dig into why this impulsive decision is wrong-headed for so many reasons is difficult to resist. Like all of the economists (including many in his own party) who say it will only hurt our economy or how this is all just a retaliatory plot against Chinese imports, not a national security issue.

In a letter penned by some of the largest beer manufactures in America, they pled with the President to exempt the beverage industry. “We appreciate your commitment to America’s security and to assuring a level playing field for American manufacturing,” the group wrote. “However, we are concerned that the scope of this investigation will include aluminum that has no national security application, such as rolled can sheet and the primary aluminum which is processed into aluminum food, beverage cans and bottles, lids and closures.”

As far as aluminum cans go, if the cost increase were as small as one penny per can, that doesn’t sound that bad until you realize that 115 billion cans were produced in America last year. If this tariff were to be fully implemented, according to the BA, a one cent increase would cost the canning industry $960 million, “resulting in lost U.S. jobs and increased costs to consumers.”

BA Aluminum Cansheet facts tariffs
Full pdf version here:

The best we can hope for now is that either the administration sees the error of their ways (unlikely) and reverses course or that in time, these differences can be negotiated. And who knows… maybe this is a last ditch effort to sway negotiations? Unlikely to work, but it is possible, especially considering the unhinged nature of this administration.

With price of gas and the consumer price index increasing on the whole, to have this added to the mix only causes more worry and price speculation.

I suppose we’ll just have to wait and see what happens next, but don’t be surprised if you see an increase of the cost of a pint, a six-pack, and even retail brewery beer on the whole. Time to start building up your beer cellar…

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